Front Groups Should Be Required to Adhere to Truth in Labeling
Standards

By JON COUPAL

There’s a joke
about public sector union bosses making the rounds in Sacramento lately: What
happens when the California Legislature hands over a blank check to the
California Teachers Association (CTA)? It’s returned the next day marked
“insufficient.”

No matter that
spending on schools is up 36 percent over the last four years, the state budget
has increased 25 percent over the last three and the state is running a surplus
of nearly $7 billion, it is never enough. The government employee unions are
continuing to press for higher taxes and more spending from which they benefit
both in terms of money and political power.

Since California
already imposes the highest taxes in all 50 states in almost every category
except taxes on property—we rank 19th highest—the obvious target is Proposition
13 which limits annual increases in property taxes. To take on Proposition 13,
public unions, including the two major teachers unions and the Service
Employees International Union, have joined with some rag-tag groups of Bay Area
radicals to create a front group, calling itself “Make It Fair.” The stated
goal is to strip Proposition 13 protections away from businesses, including
small mom-and-pop stores and residential rentals, thereby creating a “split
roll” in order to seize another $9 billion in tax revenue annually.

To undermine
support for Proposition13—which remains overwhelmingly popular in public
opinion polls—Make It Fair attempts to make homeowners feel unjustly
burdened. Backers of higher property taxes on business say that Proposition
13 provides commercial property special advantages, but it does not.
California has always taxed all real property at the same rate whether
residential or business.

The facts are
unimportant to the government employee unions. They accuse owners of commercial
property of not paying their fair share in property taxes. This ignores studies
that show that business property is actually paying a higher percentage of the
total property tax than when Proposition 13 passed and that business property
is generally assessed at closer to market value than is residential property.
This is due to the frequent improvements businesses make to property to remain
competitive and these improvements are taxed at current market value.

But if the
government employee unions are really only going after owners of commercial
property, why should the average homeowner be concerned?

First, those who
delude themselves into believing that the appetite of unions for tax dollars
will be satiated if we just give in to their demands, should know that
California state and local government employees are the highest paid in the
nation. They did not become this way because the union leadership were
shrinking violets. Once business property is taxed at a higher rate, there is
no question that residential property—homeowners—will be the next target.
Already union-backed legislation has been introduced in Sacramento to make it
easier to increase taxes on homeowners.

Secondly, most
homeowners rely on jobs in order to pay their mortgages. If taxes on
commercial property, including those on small businesses and residential rental
property, are jacked up, so prices and rents will go up as well. Business that
can’t increase their prices because of competition from firms located in other
states and countries are likely to join the exodus of companies that have
already left California. And they will take those jobs with them.

A recent front
page story in the Torrance Daily Breeze, “Tractor Firm Kubota Exits Torrance
for Texas,” illustrates the point. The report says the firm, a 43-year
resident of the community, will be departing along with 180 jobs, and reminds
readers that Toyota made a similar announcement last year. This hemorrhaging
of jobs is a direct consequence of California’s hostile business climate, and
this is before any increase in the property tax.

It would be a
mistake to underestimate the negative impact that changes to Proposition 13
would have on the California economy. A study from the Pepperdine University
School for Public Policy reveals that a “split roll” would result in the loss
of nearly 400,000 jobs and $72 billion in economic activity over five years.

If front groups
were required to adhere to truth in labeling standards, the group “Make It
Fair” would be compelled to call itself either “Take Our Jobs, Please” or “Make
Us Poor.”